Market Basket has been in a state of severe turmoil since back in June, when Arthur T. was fired as CEO by a board controlled by his estranged cousin, Arthur S. Demoulas. Hundreds of workers loyal to Arthur T. walked out, setting off a chain reaction of empty shelves, boycotting customers and fed-up vendors.

Under terms of the agreement announced this morning, Arthur T. will purchase the 50.5% stake in Market Basket that he does not already own, from Arthur S.’s side of the family for approximately $1.5 billion (putting the enterprise value at around $3 billion). The Blackstone Group BX, which had been advising Arthur T., agreed to provide more than $500 million of the purchase price — but so far has not been publicly identified by either Market Basket or Arthur T.

What remains unclear are specific terms of the deal, including if there are any earn-outs related to Market Basket’s ability to recover its lost business. An earlier buyout bid from the Dutch parent company of rival supermarket chain Hannaford (which also wanted Arthur T. in charge) is said to have been a “half now, half later” sort of offer.

]]>http://fortune.com/2014/08/28/exclusive-blackstone-group-is-market-baskets-mystery-backer/feed/0Market Basket Protest ContinuesdanielprimackSalt studies present conundrums for food industryhttp://fortune.com/2014/08/27/salt-studies-food-industry/
http://fortune.com/2014/08/27/salt-studies-food-industry/#commentsWed, 27 Aug 2014 09:00:31 +0000http://fortune.com/?p=776945]]>Salt is an absolutely essential ingredient in most processed food. So it’s no surprise that the food industry is starting to make a little hay of new research concluding that too little salt in the diet might be as harmful as too much.

But the industry so far is treading carefully. There are two reasons for that: first, because at this point it’s impossible for food producers to know what to do with this new data, all of it published recently by the New England Journal of Medicine; and second, because over the years, the food industry has created a whole thriving market for “low sodium” products. Any kind of sweeping statement on salt would hurt one part of the industry or another.

Three studies were published. Two of them concluded that underconsumption of salt might be harmful. A third basically matched the findings of earlier research, showing that cardiovascular risk rises with increases in sodium consumption of over 2 grams per day — the maximum recommended by the World Health Organization (that’s the equivalent of 5 grams of salt, since salt is about 40% of salt). The first two have drawn criticism because of the methodology used, but those are the ones the media picked up on — which is not surprising given that the media love counterintuitive science stories. The third study was far more rigorous and far less assailable.

All three studies are certainly legitimate — peer reviewed and published in a prestigious journal. And there’s not much science behind how what researchers called “aggressively low” salt targets might affect human health. But the first two were observational and found only an association between such low sodium intake and cardiovascular risk, not a cause-and-effect relationship. More study is surely needed, but none of the research published last week counters what is the overwhelming (though not universal) scientific consensus: that in general we eat too much salt and that it poses health risks, particularly hypertension.

After the research was published, the Grocery Manufacturers Association called for more study of the question, basically echoing what the New England Journal of Medicine itself said. The GMA was careful not to specifically endorse (or dispute) the new research, which is not surprising given the quandary it presents. The problem can be seen within the GMA’s statement itself. It’s almost an internal dialogue:

GMA members have been reformulating products for decades to provide lower sodium options to help consumers achieve healthy sodium intake levels. Our industry has reformulated thousands of products to reduce sodium content and meet consumer taste preferences. The industry has also developed a wide variety of reduced, low or no-added sodium products to help consumers follow recommendations of their health care professionals.

And while we are committed to continuing in our efforts to provide consumers with these lower sodium product options, we think that the articles such as those recently published in the New England Journal of Medicine warrant serious consideration by some public health authorities. In particular, the article by O'Donnell and colleagues further adds to the scientific evidence that low sodium consumption, at levels recommended by public health organizations, may actually increase cardiovascular risk. Therefore, it is vitally important that we undertake definitive studies to resolve the health impacts, both positive and adverse, of low sodium consumption to ensure public health interventions aimed at lowering sodium consumption provide benefit and do not cause harm.

In addition, the U.S. Federal government needs to conduct an independent credible reassessment of the Dietary Reference Intakes, which form the basis for current sodium intake recommendations. This reassessment is critical to establishing public health policy that does not harm the health of US consumers.

The food industry depends heavily on salt, and as long as it wants to sell us processed foods, it always will. But it also has created a whole sub-industry devoted to creating and marketing low-sodium products. According to data released last year by MarketsandMarkets, the “salt reduction market” — which includes substitute ingredients and various manipulations of salt crystals to reduce their sodium content — is growing by about 11% a year and will surpass $1 billion by 2018.

But those investments, while substantial, don’t mean the industry isn’t still heavily reliant on salt. Life for food makers would be much easier if they didn’t have to deal with the salt question at all.

But what do they do when research shows that both too much and too little salt might be harmful? Do they take a Goldilocks approach, claiming that their products contain the “just right” amount of salt? That would be very difficult concept to get across on a label, especially since there is little agreement on how much is “just right.”

The salt industry, meanwhile, isn’t too worried about Big Food’s marketing challenges. “I really wish the food industry would have a little guts,” said Morton Satin, vice president in charge of science and research for the Salt Institute, the trade group representing the salt producers. Marketing “low sodium” products is just a way for big food producers to “mollify the FDA” and industry critics like the Center for Science in the Public Interest, he said. “They’re just conforming to what their perception of public opinion is” rather than to what the Salt Institute believes the research to show — for instance, that salt is not a major contributor to hypertension.

Of course, plenty of observers differ with the Salt Institute on this score. One of them is nutritionist Marion Nestle, who sees the food industry’s efforts to reduce the salt in its products as a good thing. “The strategy is to reduce salt in food products gradually so people don’t notice it and get used to a lower salt taste,” she wrote in an email. “To do this, all food companies need to participate.”

That would be a major win for critics of salt. About 75% of the sodium we eat comes from processed food and restaurant meals, which are themselves often composed of a lot of processed foods.

Meanwhile, the industry is stuck trying to navigate through this highly complex problem. But whatever new research might come out on the harms of too little salt consumption, the ill-effects of overconsumption will continue to be an effective weapon wielded by critics of the food industry.

]]>http://fortune.com/2014/08/27/salt-studies-food-industry/feed/0salt shakerfortuneheatherWhat happens when the shelves at your grocery store are empty?http://fortune.com/2014/07/25/market-basket-dispute/
http://fortune.com/2014/07/25/market-basket-dispute/#commentsFri, 25 Jul 2014 19:30:32 +0000http://fortune.com/?p=754318]]>One week after a company-wide employee dispute slammed the brakes on food deliveries, the shelves are looking pretty barren inside most of New England's 70 or so Market Basket stores. Rather than shuffle past picket lines to contend with empty meat cases and dwindling produce bins, many of the region's customers have been taking their business elsewhere.

Exactly how many customers have been going elsewhere is a question that's begging to be answered, though of some of the area's competing grocers are remaining rather tight-lipped on the matter.

Judi Palmer, spokeswoman for Stop & Shop's New England division, declined to share specifics as to how the Market Basket situation was affecting the chain.

She noted, however, that Market Basket is "a main competitor" with a good portion of Stop & Shop stores scattered around Massachusetts. The chain no longer has stores in New Hampshire or Maine, but the Quincy, Mass.-based chain has more than 380 stores in New England. "Right now, we're so just focusing on giving all our customers a great shopping experience," Palmer said this week.

Jessica Stevens, spokeswoman for Target TGT, likewise declined to comment on the Market Basket strife or whether an increase in demand led to stocking shortages in the region. There are nearly 40 Target locations in Massachusetts and nine in New Hampshire, according to the company website. The chain carries a variety of perishable and nonperishable grocery items.

Officials from other competing grocery chains, including Hannaford Supermarkets and Wal-Mart WMT, did not respond to calls or emails sent this week.

But Jeffrey Gulko, spokesman for Shaw's Supermarkets, said the past week has been a busy one for staff working in the company's Massachusetts and New Hampshire locations.

"We've definitely seen an uptick in our sales, as well as the number of customers coming into those stores," Gulko said on Friday. Company officials said the "most noticeable jump in sales" was this past Monday and Tuesday.

Shaw's Supermarkets employs 18,500 workers around New England. The company has two distribution centers: one in Maine and one in Massachusetts.

"The sheer number of shipments being made to stores in those areas have definitely increased last week," Gulko said, noting that the company has been successful in refilling shelves to meet consumer demands.

The national implications of the Market Basket upheaval remain uncertain.

"So far we haven't heard much from any of the (competing) retailers in that area," Laura Strange, spokeswoman for the Virginia-based National Grocers Association said on Friday.

In late June Market Basket's board of directors set off an unanticipated chain reaction when they terminated beloved CEO Arthur T. Demoulas, replacing him with Co-CEOs: former Knowledge Universe CEO Felicia Thornton and former Radio Shack CEO James Gooch. Market Basket employees demonstrated their outrage this week by ceasing store deliveries, encouraging store boycotts and rallying en masse in shopping plazas.

The company has over 40 stores in Massachusetts, nearly 30 in New Hampshire and one in Maine. About 25,000 workers are employed with Market Basket.

On July 23, Demoulas made an offer to buy out his rivalling family members for an undisclosed sum in an effort to gain control of the company again.

"We care deeply about Market Basket and all our associates and we want to work together to return the company to its successful model for serving our loyal customers," Demoulas said in a written statement issued the following day.

The company's board was scheduled to meet Friday, though there's no word yet as to whether or not Demoulas' offer would be accepted. Meanwhile, upwards of 10,000 workers, many of them boarding buses from their respective Market Basket stores, attended a massive rally in Tewksbury, Mass. on Friday morning, backing up traffic for miles.

According to The Griffin Report of Food Marketing, the company is valued at $3.5 billion. Market Basket's company revenues reportedly exceeded $4.6 billion last year.

The company told investors on Tuesday that sales of its Lucky Charms cereal are booming now that it is advertising more heavily to adults who grew up ingesting the leprechaun-hocked breakfast good. An ad campaign in January urged consumers to celebrate the brand’s 50th anniversary, using its famous tagline “they’re magically delicious.” (See below.)

“These consumers grew up with our brands, and they love them,” General Mills CEO Ken Powell told analysts at the company’s analyst day on Tuesday, noting that Americans 55 and older currently make up 25% of the population. That proportion will hit 30% by 2020.

The ad campaign led to a 3% jump in sales last year, making it “one of our fastest growing cereals,” Powell said. That’s good because cereal is General Mills’ biggest category, generating $4 billion in sales last year, compared to about $3 billion each for yogurt and snacks. And cereal sales were flat last year.

Lucky Charms is not the only cereal brand getting some love from General Mills as it tries to re-energize its sleepy cereal business.

The company in May launched Cheerios Protein in two flavors: Oats & Honey and Cinnamon Almond, to cater to what its executives called “the current consumer interest in protein.” It is also adding more cinnamon taste to its Cinnamon Toast Crunch , and a fruitier taste in its Trix cereal even as it promotes that brand more aggressively to older customers too.

Maybe those kids in the Trix ad from yesteryear were wrong to admonish that poor rabbit and call him silly: Maybe Trix aren’t for kids, after all.

]]>http://fortune.com/2014/07/09/lucky-charms-adults/feed/0Lucky Charms boxespwahbaGoogle shopping delivery service is coming to your doorstephttp://fortune.com/2014/07/07/google-deliver-door-advertiser-dollars/
http://fortune.com/2014/07/07/google-deliver-door-advertiser-dollars/#commentsMon, 07 Jul 2014 16:50:10 +0000http://fortune.com/?p=739896]]>Google is bulking up its shopping delivery service to go head-to-head with Amazon — but making sales is only half its goal.

The Internet giant dominates search in almost all areas except shopping. That’s been Amazon’s strength up until now.

When shoppers go online to look for products, they choose whether to search directly on Amazon AMZN or enter a query on Google. A search on Amazon not only costs Google a sale (through their Google Wallet and Google Checkout payment services), but more importantly it also costs Google a set of eyes and the associated ad sales.

To gain a bigger share of the nearly $3.5 billion in consumer product and electronic advertising this year, Google is investing in online retail services to woo customers to search and buy directly on its site. That also gives it access to the $600 billion U.S. grocery market on top of advertising income.

Executives at the company have set aside as much as $500 million to expand retail services nationwide, which covers building up a fleet of delivery vehicles and a workforce to pack-up goods in stores and get them to shoppers’ doorsteps.

Google GOOG doesn’t operate its own warehouses but fulfills orders through nearby retail stores, positioning itself to complement and not compete against retailers like Target. The company already delivers groceries, clothing and electronics from select retailers in areas around San Francisco, Los Angeles and New York City. When it will expand the service other cities is unclear. But given the size of the planned investment, Google has some big ambitions.

Essentially, Google is looking to close the loop for both shoppers and advertisers. Shoppers can get local products delivered quickly, while advertisers can more properly target those buyers — all through one, contained Google-built ecosystem.

]]>http://fortune.com/2014/07/07/google-deliver-door-advertiser-dollars/feed/0GooglelorenzettifortuneWal-Mart’s latest move to slam Target in Canada: New CEO with grocery chopshttp://fortune.com/2014/06/20/walmart-canada-ceo/
http://fortune.com/2014/06/20/walmart-canada-ceo/#commentsFri, 20 Jun 2014 17:21:41 +0000http://fortune.com/?p=723595]]>Wal-Mart Stores WMT has turned to a Belgian grocer in its latest move to keep Target TGT from finding its footing in Canada.

Walmart Canada, which operates 391 stores, said on Friday it has hired Dirk van den Berghe, most recently the head of international food retailer Delhaize Group’s operations in Luxembourg and Belgium, as its new CEO starting in August.

“His vast experience will allow us to strengthen our growing food business in Canada,” said Shelley Broader, recently promoted to president and CEO of Walmart's EMEA Region (which also includes Canada for Wal-Mart’s purposes.)

Just as it is in the United States, where grocery generates more than half of Wal-Mart’s sales, food is a big category for Walmart Canada. And it was a bright spot in Walmart Canada’s most recent quarterly sales results, which showed a decline in comparable sales.And just like in the U.S., Walmart has been very promotional in its Canadian grocery business to increase the price gap with the competition, allowing it to win some market share.

That can’t be good news for Target, which is also a major grocery retailer, but is struggling to recover from a botched entry into the Canadian market in 2013 which has cost it $1 billion and counting.

Van den Berghe’s appointment was the latest by Wal-Mart CEO Doug McMillon to shuffle the retailer’s executive ranks since starting his job in February. He has named new heads to Wal-Mart’s e-commerce business, its Asian unit and its EMEA unit.

The superstore will increase its spending 300 million yuan ($48.32 million) over 2013, 2014 and 2015 to ensure it is meeting food standards in the Asian nation. That's three-times the previously planned 100 million yuan over the same period, Reuters reported.

Wal-Mart WMT also plans to do more DNA testing on meat products and supplier inspections, as well as test more of its Chinese stores using two mobile safety labs.

China’s food and grocery market is expected to expand to $1.5 trillion by 2016, and Wal-Mart’s food safety reputation has become a concern in this important market after two recent incidents.

Earlier this year, the retailer’s “Five Spice” donkey meat was found to have fox meat, and in 2011, it was fined for selling expired duck meat.